The first example I thought of was when I was younger and wanted internet access. I didn't pay for dialup as long as I could figure out a free option. Our library had some free system you could dial into and I figured out a way to make reasonable use of that. Then when I moved, I used some of those Juno and Netzero type services for a while.
But once I had the option to pay for cable internet, I just went straight for it. The experience was an order of magnitude better, and there was simply no way to hustle a roughly equivalent free option out there. But looking back, I don't know if I would've considered a free, ad-based cable provider if it existed back when I was a broke young dude pinching pennies wherever I could.
Then again, nowadays, I would pay a bit extra to ensure my cable internet provider did not read, prioritize, or otherwise mess with my data if that was an option. But I doubt many others would choose to do that if it was extra charge for nebulous benefits.
The problem is that once something is free there's no going back. You'll never be able to compete with free. Free is the new antitrust. The only players that will be able to survive and thrive in this model are the ones with the most data and the most socially exploitative techniques.
Lots of us are happy to pay for nice things like operating systems that don't use this model but there aren't enough of us to adequately fund such projects. We're just not a big enough market share.